The Philippine pharmaceutical industry is taking a beating from the government's decision to impose a 50% price cut on certain drugs. For the first time in the country's history, 21 molecules or medicines were forced to comply with the Maximum Drug Retail Price (MDRP) system that was implemented last September. These are medicines used to treat hypertension, diabetes, common infections, amoebiasis (a leading cause for diarrhea), and some cancers such as leukemia. The cut went into effect Aug. 15, 2009. In addition, pharmaceutical companies are committed to reduce by approximately 10-50% the prices of 22 other products.

The price controls system is part of the government's Cheaper Medicine Bill, which was passed in late 2008. The system will be reviewed after three to six months by the Department of Health. To help enforce the price cuts, the government has lobbied the public to report noncompliant drugstores and has taken action against four such stores that violated the new ruling.

The system is meant to provide affordable and easy access to healthcare to citizens, especially the poor, but industry players remain skeptical that the program will provide such a solution. According to a statement released by the Pharmaceutical and Healthcare Association of the Philippines (PHAP), the price controls policy "is not the best approach as most medicines will remain inaccessible to the poor who live on an income of less than PHP100 ($2) a day."

Table II (Part 1): Drug products that fall under the Voluntary Price Reduction scheme as provided by Resolution 2009-001 of the Philippine Advisory Council for Price Regulation.

To worsen the situation, taxation on medicines comprises approximately 20% of the retail price of drugs in the country. This explains why medications (both over the counter and prescription) in the Philippines are typically priced 40-70% higher than those sold in nearby Asian countries, according to 2008 figures cited by the Philippine International Trading Corporation.

Private hospitals have already upped prices for their services to offset the reduced drug prices. Other related problems such as delays in obtaining rebates from drug companies by drugstore representatives have also started to surface.

Table II (Part 2): Drug products that fall under the Voluntary Price Reduction scheme as provided by Resolution 2009-001 of the Philippine Advisory Council for Price Regulation.

Over the years, the government has implemented healthcare policies to alleviate the problem of accessibility and affordability, only some of which have been effective. For example, a generic-drug law expanded the amount of generic drugs and manufacturers in the country. On the other hand, the government-run PhilHealth insurance package is unable to cover the projected 77.4 million beneficiaries (84% of the 92 million Filipinos) because it has only 13.85 million paying members. Similarly, the Drug Price Reference Index, which is meant to inform consumers of prices, provides only retail-drug pricing and is unable to address the high drug-pricing problem.